Delay In U.S. Army Upgrade Of Chinook Helicopter Would Devastate Boeing Workforce In Pennsylvania

The Boeing Company’s helicopter plant in Ridley Township, Pennsylvania is an oasis amidst industrial decay. The lower Delaware Valley was once America’s manufacturing heartland, hosting the world’s biggest builder of locomotives (Baldwin), the biggest television production site (Philco), refineries and shipyards. Most of that is gone now, leaving the 4,200 skilled workers at the Boeing complex as a striking exception to recent economic trends.

But a potential change of plans by the U.S. Army could soon bring devastating news for hundreds of employees at the Boeing plant – not to mention workers in a supply chain stretching from the Midwest to Florida. The Army is contemplating a long delay in the production of an upgraded version of its CH-47F “Chinook” helicopter – the signature airframe built at the complex.

If that delay actually happens, it will undermine every facet of Boeing’s strategy for sustaining jobs and profits in the Delaware Valley. Other rotorcraft built there such as the Navy/Marine V-22 Osprey will cost more to manufacture as overhead is spread across a smaller number of airframes. Foreign sales of the Chinook – which currently is used by 20 allies -- will become harder to book. Union bumping rules will force out younger workers with less seniority. Boeing may even need to look offshore for suppliers of critical components as domestic sources collapse or turn away.

And that is just the industrial fallout. For soldiers in the field, delay of the “Block II” Chinook means they will have no rotorcraft capable of transporting the successor to their humvees, known as the Joint Light Tactical Vehicle. For taxpayers, it means spending billions of dollars more than expected to sustain skills at an under-utilized industrial facility until Chinook production returns to economical production rates at some future date – assuming it ever does. The proposal to delay the Block II version of Chinook is thus a case study in not thinking through the broader implications of a decision for the military or the economy.

The CH-47 Chinook is the U.S. Army's heavy lift helicopter, and also one of the fastest rotorcraft in the world. Without "Block II" upgrades though, it will be unable to carry the Army's next-generation jeep, known as the Joint Light Tactical Vehicle.

Wikipedia

I visited the Pennsylvania complex on a bleak day just before Thanksgiving, and talked to plant managers about how a delay might impact their workforce. Boeing is a longtime supporter of my think tank, so I knew several of the execs with whom I met. They all expressed surprise that the Army might defer an effort aimed at restoring payload (lift) capability to its heavy helicopters, which was lost when thousands of pounds of new defensive equipment and other items were added.

The company didn’t get an inkling of what might be coming until April of this year. The Block II effort was ahead of schedule and under budget, with three prototypes being readied for testing. A plan was in place for smoothly transitioning the skilled workforce from production of the current Chinook variant to the improved Block II. And then the company heard that Block II might become a “bill-payer” in the Army budget process for other priorities.

Under the program of record, improved Chinooks would still be delivered to special operations forces in the Block II configuration, because those upgrades are funded from a different part of the budget, and special operators desperately need a replacement of their aged Chinooks. But only 69 of those are planned, with deliveries commencing in 2020. The lion’s share of the planned Block II buy consists of 473 airframes for the regular Army (218 new/255 refurbished), representing over 80% of the planned production run.

Deliveries of the latter helicopters would begin in 2023 if there is no delay, as production of the current Block I Chinook winds down. But if Block II does delay, the only way to keep the Chinook workforce employed would be to refurbish airframes already in the active fleet -- without adding the improved capabilities of Block II. Those new capabilities aren’t just about increased payload and lift: Block II would also enhance pilot situational awareness and reduce maintenance expenses, which cost a good deal more across the lifetime of the program than initial production costs do. Under the Block II scheme, all of the Chinooks in the joint fleet would end up with a common architecture, reducing the spare parts count and logistics challenges.

As I wrote in a previous Forbes piece about the nation’s last surviving tank plant, Army budgeteers seem to make their program choices with almost no regard for the impact on the industrial base and broader economy. That might have been understandable during the Obama years, given the relative indifference to such matters in the White House during that presidency. But President Trump is Obama’s polar opposite when it comes to protecting manufacturing jobs, and Army leaders must know that.

It thus would not be surprising to see the Office of the Secretary of Defense reverse an Army budget decision likely to hurt U.S. industrial strength – particularly in a state vital to the president’s reelection prospects. However, Congress has only recently sought to shift authority for buying weapons from the Pentagon bureaucracy to the individual military departments, so there is reluctance about dictating Army spending priorities.

Perhaps the Army will rethink its spending plans for fiscal 2020 and beyond before any change in the Chinook program generates a political controversy. If not, then the Delaware Valley could be poised for yet another chapter in its long chronicle of industrial decline.